783 F.

2d 421
54 USLW 2442, 228 U.S.P.Q. 705, 1986
Copr.L.Dec. P 25,891

M. KRAMER MANUFACTURING CO., INC., Appellant,

v.
Hugh ANDREWS, et al., Tim Caldwell, Drew's Distributing,
Inc., Drew's Distributing Co., and Lynch
Enterprises, Inc., Appellees.
No. 84-1710.

United States Court of Appeals,

Fourth Circuit.
Argued Jan. 7, 1985.
Decided Feb. 6, 1986.
Rehearing Denied March 27, 1986.

Ralph Bailey, Greenville, S.C., (Bailey & Hardaway, Greenville, S.C., on

brief), for appellant.
Wellington M. Manning, Jr., Greenville, S.C., (Dority & Manning,
Greenville, S.C., on brief), for appellees.
Before RUSSELL and CHAPMAN, Circuit Judges, and
HAYNSWORTH, Senior Circuit Judge.
DONALD RUSSELL, Circuit Judge:

This appeal involves a dispute over the right to manufacture and sell a computer
video game--"Hi-Lo Double Up Joker Poker." Essentially, the plaintiff claims
that the defendants infringed the plaintiff's copyright in the game by copying
the computer program controlling the machinations of the video characters and
by copying the audiovisual aspects of the game. In addition to its copyright
infringement claim, the plaintiff asserts that the defendants falsely designated
the origin of the defendants' version of the game in violation of section 43(a) of
the Federal Trademark Act, 15 U.S.C. Sec. 1125(a), and that the defendants
competed unfairly with the plaintiff in violation of the common law.1 When the

plaintiff filed its complaint, it moved for a preliminary injunction, which was
granted. Prior to trial, the injunction was vacated, and the district court tried the
case without a jury, finding for the defendants. The plaintiff appeals, and we
reverse.
I. Factual Background
2

The facts of this case are quite complex and require careful explication. The
plaintiff is M. Kramer Manufacturing Co., Inc., (Kramer Manufacturing), a
New Jersey corporation having its principal place of business in New Jersey.
Defendants Hugh Andrews, Jr. (Andrews) and Tim Caldwell (Caldwell) are
citizens of the State of South Carolina. The other defendants, Drews
Distributing Inc., Drews Distributing Co. (collectively Drews Distributing) and
Lynch Enterprises, Inc. (Lynch Ent.) are South Carolina corporations.2
Andrews is the president and sole shareholder of Drews Distributing; he thus
controlled all Drews Distributing activities. Andrews is also the sole
stockholder of Lynch Ent.

Kramer Manufacturing markets various electronic, coin-operated video games,

including the game at issue here--an electronic card game based on draw poker.
Lynch Ent. and Drews Distributing also manufacture and market various
electronic, coin-operated video games, including games similar to those at issue
here. In addition, Andrews operates a sister corporation, which is not a party to
this suit, that installs and services the various video games sold by Lynch Ent.
and Drews Distributing.

A. The Development of the Game

4

The record does not clearly indicate the facts surrounding the origin of the
video game or the copyright which is in dispute here. Being bound by the
factual findings of the district court unless clearly erroneous, we have reviewed
the record and essentially adopt its factual findings as herein set forth with our
modifications as noted. The game, Hi-Lo Double Up Joker Poker, has gone
through various modifications, as is typical of video arcade games. The original
version of the game, which was actually a variation of the card game blackjack
that displayed five cards, was created by Kramer, Robert Battaglia, and Bill
Blair in late 1979. Battaglia was then an engineer employed by LJF
Corporation (LJF), a New Jersey corporation engaged in the engineering and
manufacturing of video games. James Foy was the principal of LJF, and he had
hired Battaglia to engineer and Kramer to provide ideas for the development of
a video arcade card game. Battaglia acted as the software designer, engineer,
and programmer, while Kramer essentially provided the concepts upon which

the game was built. Although the game was developed by Battaglia and
Kramer, the record is clear, as most noticeably evidenced by Kramer's own
testimony, that LJF owned the rights to the original production model of what
was eventually to become Hi-Lo Double Up Joker Poker. Despite LJF's
ownership of the game from its inception, Kramer in fact marketed the game
through Kramer Manufacturing.
5

After marketing the five card blackjack game, Kramer recognized the potential
for profit in this business and entered into an arrangement with Pasquale
Storino to form a New Jersey corporation called Computer Portrait Center
(CPC), which marketed various electronic devices. The two of them, Storino
and Kramer, were the sole owners of CPC. In addition to his association with
Kramer, Storino was also a principal in Gametronics, another New Jersey
corporation. LJF had sold various video games to Gametronics, and Kramer
and Storino met through their mutual association with LJF.

Sometime prior to 27 October 1981, Battaglia, working for LJF, and with the
cooperation of Kramer, completed a video game called Draw Poker II which
had a different printed circuit board than prior games, included an attract mode
unlike prior games, and included a split screen and play mode with jokers
unlike prior games. Nevertheless, the testimony and documentary evidence is
clear that Draw Poker II encompassed a prior version of the same game, Draw
Poker I. That is, Draw Poker II was not an independent creation of the
engineers who had created Draw Poker I but resulted from various and often
subtle changes in the earlier version, Draw Poker I. The changes to Draw Poker
I were made slowly and over a period of time; the total result of those changes
being an almost complete transformation of Draw Poker I into Draw Poker II.

On 27 October 1981, LJF transferred by letter and for consideration all rights to
Draw Poker II as it then existed to Kramer Manufacturing. The defendants have
challenged the adequacy of the consideration, premising their challenge to the
validity of Kramer Manufacturing's copyright on that challenge, among others.
Kramer testified, and his testimony was not contradicted, however, that
although Kramer Manufacturing did not pay the entire contract price for the
rights to Draw Poker II, LJF released him and his company from all obligations
under the contract by accepting certain computer hardware and harnesses. In the
absence of any evidence to the contrary, and doubting the standing of any of the
defendants to challenge the adequacy of whatever consideration was exchanged
for the rights to Draw Poker II, we find that the letter of 27 October 1981
effectively transferred all rights in Draw Poker II to Kramer Manufacturing.

Through Battaglia's guidance, Draw Poker II went through many more

modifications and eventually evolved into the game that forms the basis for this
suit: Hi-Lo Double Up Joker Poker. Battaglia left LJF in August, 1981, and on
31 August 1981 Battaglia became a full-time employee of Kramer
Manufacturing. The revised version of Draw Poker I was then in what the
parties refer to as revision G, with revisions H through K to follow. Soon after
Battaglia joined Kramer Manufacturing, he completed the programming
necessary to transform Draw Poker I into a marketable Draw Poker II. At the
time of transfer of the rights to Draw Poker II to Kramer Manufacturing, as
discussed above, Draw Poker II was not completely "integrated"; therefore,
Battaglia's modifications were necessary prior to sale of the game to the public,
and he made those modifications while in Kramer Manufacturing's employ.
Draw Poker II was first manufactured in late 1981, and Kramer Manufacturing
has since sold over 6,000 of the games.
9

The final changes to Draw Poker II, which resulted in the game Hi-Lo Double
Up Joker Poker, occurred between November 1981, just after Battaglia left
LJF, and February 1982. Kramer Manufacturing began marketing the game
with the hi-lo double up feature in February, 1982. The hi-lo double up feature
allowed a player, after winning a hand, to choose to play "hi-lo" and double his
"credits," or plays, if he correctly guessed whether the next card would be
higher or lower than the card then appearing. On 15 April 1982, Kramer
Manufacturing began marketing the final version of the game, Hi-Lo Double
Up Joker Poker. This version was identical to the one marketed in February
except it contained a "flashing card feature": a series of flashing cards rather
than still cards indicated the player's hand. The audio-visual differences
between Draw Poker II as of 31 August 1981, when ownership was transferred
from LJF to Kramer Manufacturing and Battaglia left LJF for Kramer
Manufacturing, and the Hi-Lo Double Up Joker Poker game sold in April, 1982
were changes in the attract mode to include the hi-lo double up feature,
instructions for hi-lo double up in the play mode, the hi-lo feature itself with
instructions as to which button to push to activate the optional game, and the
series of flashing cards instead of still cards throughout the game.

B. The Relationship Between Andrews and Kramer

10
11

In September, 1981, Andrews incorporated Drews Distributing for the purpose

of distributing and servicing video game equipment. Andrews' association with
Kramer developed out of Drews Distributing's sales of Kramer's video games.
Drews Distributing bought various versions of Draw Poker I and II and Hi-Lo
Double Up Joker Poker from Kramer Manufacturing. Andrews and Kramer
often discussed the possibility, during their frequently combined vacation and
business trips, of Drews Distributing becoming the exclusive licensee for the

sale of Kramer Manufacturing's video games in either South Carolina or in what

Kramer and Andrews termed the southeast area. Andrews prepared several
drafts of an exclusive distributorship agreement and forwarded them to Kramer.
None of those agreements apparently were satisfactory to Kramer, because he
did not accept them. Instead, he modified some of the terms of the agreements.
The record is unclear whether Kramer returned the agreements, as modified, to
Andrews or kept them in his personal files. In any event, the record is clear
that, as the district court found, Andrews and Kramer never agreed on mutual
terms for the exclusive distributorship agreement and never entered into any
distributorship agreement whatsoever, because the changes made to Andrews'
proposal by Kramer were never accepted by Andrews. During 1982, the
dealings between Kramer and Andrews amounted to approximately $1,400,000
worth of sales, about 98% of which represented sales of Hi-Lo Double Up
Joker Poker.
12

In late 1982, recognizing the scope of the video game market as Kramer had
earlier, Andrews began researching how to market and manufacture his own
video poker game. First, and as a result of the lack of any definitive
distributorship agreement, Andrews began marketing video poker games,
similar to that produced by Kramer, from Electro Sport and Merit Industries,
other video game manufacturers. In addition, Andrews began purchasing in
September or October of 1982 other Hi-Lo Double Up Joker Poker games that
were being sold by Hillside Gaming Corporation (Hillside) and SMS
Manufacturing Corporation (SMS). The principal of SMS was Pasquale
Storino, who was a co-principal with Kramer in CPC.

13

Thus, it is clear that the development, manufacture, and sale of the Draw Poker
video game involved much shifting of alliances and business relationships.
Storino and Kramer had been involved in the original development of the Draw
Poker game when LJF was revising the initial backjack-based game. They, in
fact, formed CPC to invest in the video game market expansion. At the same
time, however, they were competing with each other through their respective
corporations: Kramer was selling through Kramer Manufacturing and Storino
was selling through SMS.

C. The Copying of the Game

14

Andrews' second step toward establishing his market position was to attempt to
manufacture his own Draw Poker game. Toward that end, in August, 1982, he
contacted Kenneth Lynch (Lynch), an electronics engineer. It is their activities
that form the basis for Kramer's infringement claim. Lynch and Andrews
formed defendant Lynch Ent. to develop a computer video game to compete

with Hi-Lo Double Up Joker Poker. Andrews gave Lynch a printed circuit
board containing ROMS3 from which to create a video poker game. The board
that Andrews gave Lynch for purposes of copying was marked "Copyright
Applied For M. Kramer Manufacturing." Because of this marking Lynch
refused to use that board to develop the game. Andrews subsequently supplied
to Lynch a printed board and ROMS from an SMS game. Lynch copied that
board, which was actually a copy of the Kramer game, and produced a game
substantially identical to the Kramer game.
15

Although the games are similar, Lynch changed portions of the SMS game,
which had been previously copied from the Kramer by changing the
configuration of the board that holds the ROMS, changing some words in the
audiovisual display, and by changing the design on some of the cards.
Specifically, he inserted the name "Lynch Enterprises" in the attract mode,
inserted the insignia "LE" on the back of the playing cards, and changed some
of the wording in the attract and play modes. Lynch deleted the words "Be a big
winner," "Don't go by, give it a try," "Take a shot" and inserted "Try your
skill," "For fun and free replays," and "Skill points." In December 1982, Lynch
sold sixteen of his games to a distributor in Pennsylvania; thereafter he sold
only to Drews Distributing.

D. Copyright Registration
16

Registration of the copyrights for the various games involved in this case is as
convoluted as the facts surrounding the games' development. Kramer
Manufacturing's 11 March 1983 application for registration of the audiovisual
work in "Hi-Lo Double-Up Joker Poker" listed as a previous or alternate title
the name "Hi-Lo Double Up Joker Poker with Flasher, Model III." The
registration application also stated that the audiovisual work for which
registration was requested was a derivative work, as defined under the statute,
based on a "[n]ew compilation of text, and new and revised graphics, not
appearing in prior models." The copyright was registered on 14 March 1983 as
PAu 480-757. Kramer Manufacturing also submitted a copyright application for
copyright of the audiovisual "Hi-Lo Double Up Joker Poker." It listed as an
alternative or previous title the name Hi-Lo Double Up Joker Poker with
Flasher, Model II. After the copyright office initially rejected that application
because it contained no copyrightable graphics "in view of [a] recent
registration for what [was] basically the same text," i.e., registration PAu 480757, Kramer Manufacturing's attorney certified that the work submitted was a
new compilation of previously copyrighted material. The copyright office then
registered the audiovisuals for Model II under PA 168-068. Thus Kramer
registered Model III (registration PAu 480-757) first, as a compilation of

Models II and I, and then registered Model II (registration PA 168-068) as a

compilation of earlier works on 28 March 1983.
17

Foy and Storino, however, had already obtained copyright registrations in the
computer programs underlying the games. They had submitted an application
for "Draw Poker/Joker Poker" on 19 October 1982. The copyright office
registered the computer program in Draw Poker/Joker Poker, TXu 106-735, on
21 October 1982. On 19 October 1982, Foy and Storino also submitted a
copyright application for Draw Poker/Joker Poker/Hi-Lo. The registration
covering the computer program for Draw Poker/Joker Poker/Hi-Lo, TXu 106736, was granted on 21 October 1982.4

18

Based on the copyrights they had obtained in the computer programs, Foy and
Storino, now acting through SMS, sued Kramer Manufacturing, Michael
Kramer, and his wife Branda Kramer for copyright infringement "by
reproducing, publishing, marketing and distributing without license or consent
[of SMS, Foy, Storino, or LJF] certain video games ..." in the United States
District Court for the District of New Jersey on 16 February 1983.5 Two days
after suit was filed against him by Foy and Storino, Kramer filed the contract
assigning all rights to Kramer Manufacturing in the "hardware and software
design of Draw Poker II between Kramer Manufacturing and LJF," which was
signed by Foy, in the copyright office. A month later, Kramer filed and was
granted his registration of the copyright in the audiovisual aspects of the games,
as noted above. While being sued by Foy and Storino for copyright
infringement based on registered copyrights in the computer programs that
generated the audiovisual aspects of Hi-Lo Double Up Joker Poker, Kramer
obtained a copyrighted registration in the audiovisual aspects of that same
game. Thus, the copyright registration in the computer program was held by
one party to the suit in New Jersey and the copyright registration in the
audiovisual display that is generated by the computer program was held by
another party to that same suit.

19

The result of these conflicting copyright registrations was settlement

negotiations, and on 9 May 1983, a settlement agreement between Kramer
Manufacturing, SMS, and LJF was executed. All parties to the suit released all
other parties to the suit from any possible copyright infringement claims arising
out of the video arcade games listed on an attached schedule.6 All parties also
cross-licensed the others, a license that was termed a "nonexclusive worldwide
license in perpetuity," to use the copyrights of any of the then existing games.
They further agreed not to authorize any third party to manufacture or distribute
any of the games except games that the authorizing party itself manufactured.
Finally and most important to this litigation, Foy and Storino, through LJF and

SMS, agreed not to pursue any copyright infringement claim they might have
against Drews Distributing, Lynch Ent., or Andrews and agreed that Kramer
Manufacturing would have the exclusive right to bring such suit. In the event
Kramer or Kramer Manufacturing did not bring suit within 45 days, the right to
sue would revert back to Foy and Storino or one of their related companies.
20

A month later, on 2 June 1983, Kramer Manufacturing brought the suit

underlying this appeal against Andrews, Caldwell, Drews Distributing, and
Lynch Ent. Kramer Manufacturing's complaint alleged that the defendants, by
distributing copies of the game Hi-Lo Double Up Joker Poker, had infringed
upon its copyright in "[t]he computer program and the audiovisual work
displayed on the screen during all modes of the [g]ame's operation...."
Complaint p 8, Kramer Manufacturing v. Andrews, 83-1344-3 (D.S.C. filed
June 6, 1983). Thus, Kramer Manufacturing alleged infringement of its
copyright in both the computer program and the audiovisuals and attached a
copy of copyright registration PAu 168-068, covering only the audiovisual
work in Model II. The complaint also alleged that by copying Kramer
Manufacturing's "distinctive art work" on the front glass panel of the game, by
copying "the configuration of the console embodying the Game," and by
copying the name Hi-Lo Double Up Joker Poker, the defendants had falsely
designated the origin of their game in violation of section 43(a) of the Federal
Trademark Act of 1946, 15 U.S.C. Sec. 1125(a) (1983), and had competed
unfairly.

21

Two days later, the district court entered a temporary restraining order
preventing the defendants from manufacturing or distributing:

22

(1) any video card game embodying [Kramer Manufacturing's] copyrighted

computer program and audiovisual work or any substantial copy thereof,

23

(2) any video card game containing all or substantially all of the features of
[Kramer Manufacturing's] Hi-Lo Double Up Joker Poker video card game, and

24

(c) [sic] any video card game using the original artwork and characteristic
console configuration of [Kramer Manufacturing's] Hi-Lo Double Up Joker
Poker video card game or any similar artwork or configuration, or using the
title "HI-LO DOUBLE UP JOKER POKER" or any similar title....

25

The court also ordered Kramer Manufacturing to post a bond securing the
defendants for any losses incurred as a result of the temporary restraining order
and scheduled a hearing for 14 June 1983. After a subsequent hearing, which

had been postponed on the motion of the defendant's counsel, the district court
dissolved the temporary restraining order as improvidently granted. After trial
without a jury, the district court issued an unpublished opinion finding for the
defendants on all counts.
II. District Court Opinion
26

The trial court opinion found for the defendants on the copyright claim by
resolving several alternative holdings in their favor. First, the court examined
the audiovisual content of Kramer Manufacturing's Hi-Lo Double Up Joker
Poker to determine whether it contained any copyrightable material. Stating the
law to be that "the registration for a compilation of derivative work only covers
the copyrightable new material and not elements found in pre-existing
published versions," the district court held Kramer Manufacturing's registration
PA 168-068 covered only those copyrightable audiovisual elements that were
not contained in the audiovisuals of any previously published version of the
game. After reviewing Draw Poker Model I with attract mode, Joker Poker
Model II with attract mode, and Hi-Lo Double Up Joker Poker with Still Card
and comparing those previously published games with Hi-Lo Double Up Joker
Poker with Flashing Card, for which registration PA 168-068 was obtained, the
court found that "there is no copyrightable [sic] material which was not in preexisting works, therefore, PA 168-068 is invalid...." That is, the district court
excluded from any possible copyright protection all material that had been
published in prior works, thus limiting protection to those elements that were
added in the latest revision. Specifically, the court found that the only
difference between Hi-Lo Double Up Joker Poker with Still Card and Hi-Lo
Double Up Joker Poker with Flashing Card was, as the names suggest, the
addition of the flashing card feature, which is a series of cards with faces and
symbols that flash rapidly in succession. Because it said all but the flashing
card feature was contained in a prior published work, the district court excluded
that pre-existing portion from copyright protection. The court further held that
the flashing card feature was not copyrightable, because it amounted to only
"an idea, concept or system of flashing cards," to which copyright protection is
not extended under 17 U.S.C. Sec. 102(b) (1983).

27

Although the above reasoning resolved the case in favor of the defendants, the
district court also addressed whether any copyright that might exist was
forfeited and whether any valid, non-forfeited copyright was infringed. The
court held that, assuming Kramer Manufacturing possessed a valid copyright in
the audiovisual aspects of the game, Kramer Manufacturing had forfeited that
copyright by failing to affix a proper copyright notice on works distributed to
the public. In addition, assuming that Kramer Manufacturing had a valid

copyright, which had not been forfeited, the district court held that the
defendants had not infringed that copyright. Finally, the district court found that
any infringement that might have occurred was innocent.
28

The owner of a copyright forfeits that copyright by failing to affix proper

notice, which consists of the symbol CR, the word copyright, or the
abbreviation copy; the year the work was first published; and the name of the
copyright holder. The plaintiff admitted that it did not affix a proper notice
when the game was first published, but argued that the failure had been cured
under 17 U.S.C. Sec. 405 by its "reasonable efforts" to add copyright notice to
the game. The district court rejected that argument by finding that

29 was no effort made to apply a proper notice to Plaintiff's games located in its
there
regional warehouses; to add proper notices to games in the possession of distributors;
nor to send out replacement programs that included a proper notice.... Kramer took
corrective measures only with the new games and with circuit boards returned for
servicing or replacement.
30

The district court reasoned that because "reasonable efforts" "should include
the addition of notices on copies in the hands of a distributor" and because in
those cases finding a reasonable effort, the individual provided to distributors
stickers or labels for affixation to previously delivered copies, Kramer
Manufacturing's efforts were not reasonable.

31

Addressing whether the defendants had infringed Kramer Manufacturing's

copyright, assuming that copyright not to have been forfeited, the court
analyzed the audiovisuals of the plaintiff's and the defendant's games and stated
"there is a lack of substantial similarity between the Plaintiff's audio visual ...
and Defendant's game...." The district court's analysis or comparison of the
games is contained in one sentence of the opinion:

"Here, Defendants used

32
33
different
phraseology in its audio visual presentation, modified the playing cards,
added 'LE' to the back of the cards, and inserted 'Lynch Enterprises, Inc.' into the
attract mode of the game."
34

Based on that analysis, the court concluded that there was insufficient
similarity between the two games to warrant a finding of infringement.

35

The court next concluded that any infringement which might have occurred
was innocent infringement under 17 U.S.C. Sec. 405(b), and thus, not

actionable. The court reasoned that any infringement was innocent because
when the defendants began to manufacture the game, none of plaintiff's games
exhibited proper notice and Storino, Foy, and Kramer were all claiming rights
to the game. Furthermore, Andrews had received an attorney's opinion letter
indicating that Kramer did not possess copyrights in the game.
36

On the basis of these conclusions the district court dismissed Kramer's claims.
From such decision, Kramer has appealed. We reverse.

III. Position of the Plaintiff

37

Kramer Manufacturing raises several issues on appeal. It argues that because a

registered copyright covers previous versions of the work that were completed
by the same author, the district court erroneously excluded any copyrightable
features of the predecessor games to Hi-Lo Double Up Joker Poker with
Flashing Card when determining whether that game contained any
copyrightable elements. Second, Kramer Manufacturing argues that because
the record reflects that it added proper copyright notice to every game
manufactured and sold after the omission of a proper notice had been
discovered, the trial judge erroneously concluded that no reasonable effort had
been made to attach a proper copyright notice to Kramer Manufacturing's game.
Third, the plaintiff complains that the trial court should not have excluded the
computer program that runs the video card game and produces the
audiovisuals, but should have permitted Kramer Manufacturing to introduce the
computer program and compare its program with the program for the Drews
Distributing game for the purpose of proving copying of the audiovisuals.
Finally, the plaintiff contends that non-innocent infringement was established
as a matter of law by Andrews' admission of copying a copy of plaintiff's
computer program.

IV. Summary of Conclusions

38

We find that Kramer Manufacturing did possess a valid copyright in the

audiovisuals of the game, that the district court erred by not permitting the
plaintiff to introduce the computer program for Hi-Lo Double Up Joker Poker
for the purpose of proving copying, and that Kramer Manufacturing did expend
a reasonable effort in attempting to attach a proper copyright notice to its games
after discovering the omission of proper notice. Furthermore, we find error in
the district court's determination as to innocent infringement. We first address
the question of the copyrightability of plaintiff's audiovisuals.

V. Copyrightability

39

We begin with a general review of the law of copyright as it has developed over
the years. The right of copyright is a creature of federal statute, with its
constitutional base in Article I, Sec. 8, cl. 8. The first copyright statute under
this constitutional grant was enacted in 1790. Since that time there have been a
number of revisions or amendments, both by Congress and in judicial
decisions, in order to keep the Act in step with technological developments. For
example, photographs received copyright recognition in 1884 (Burrow-Giles
Lithographic Company v. Sarony, 111 U.S. 53, 4 S.Ct. 279, 28 L.Ed. 349), and
sound recordings in 1973 (Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303,
37 L.Ed.2d 163). In 1976, after a period of gestation over some twenty years,
the Congress enacted a complete revision of copyright law which represented
Congress' response at the time to the startling developments recently made in
technology and science.7 This new Act, known as the Copyright Act of 1976
and codified in 17 U.S.C. Sec. 101, et seq. represents the existing statutory
authority for copyright. Subsequently, in 1980, that Act was amended to
include expressly what had been generally assumed as implicit in the Act of
1976 itself that computer programs were proper subjects of copyright. The
Amendment did this by including in the definitional section of copyrightable
subject matter a definition of "computer program."8 This Amendment also
replaced section 117 of the 1976 Act with a new section limiting the exclusive
rights given "authors" in copies of computer programs. 9 Accordingly, it is the
Act of 1976 as so amended in 1980 which is controlling in this case.

40

Under the 1976 Act, copyright protection is granted "in original works of
authorship fixed in any tangible medium of expression, now known or later
developed, from which they can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a machine or device." Section
102(a). One of the important purposes of this section, as declared in the
legislative history, was to broaden the scope of fixation, an essential
requirement for copyright medium of expression and, specifically to abrogate
the "artificial" rule enunciated in White-Smith Co. v. Apollo Co., 209 U.S. 1,
28 S.Ct. 319, 52 L.Ed. 655 (1908), which precluded protection for works not
embodied in human-readable medium. The House Report, in explication of this
purpose, said that this section "makes no difference [in determining the
existence of the required element of fixation] what the form, manner, or
medium of fixation may be--whether it is in words, numbers, notes, sounds,
pictures, or any other graphic or symbolic indicia, whether embodied in a
physical object in written, printed, photographic, sculptural, punched, magnetic,
or any other stable form, and whether it is capable of perception directly or by
means of any machine or device 'now known or later developed.' " 1976
U.S.Code Cong. & Ad.News at 5665. The new section also declares in section
102(a) that "[w]orks of authorship [shall] include the following categories: ...

(6) motion pictures and other audiovisual works;...." (Italics added) Finally, the
traditional rule declared in Mazer v. Stein, 347 U.S. 201, 217, 74 S.Ct. 460,
470, 98 L.Ed.2d 630 (1954) that copyright protection extended "only to the
expression of the idea--not the idea itself" was codified in section 102(b) of the
Act.
41

In section 101 Congress, inter alia, defined the term "audiovisual works" which
had been identified in section 102(a) as a proper subject of copyright protection,
thus:

42

"Audiovisual works" are works that consist of a series of related images which
are intrinsically intended to be shown by the use of machines or devices such as
projectors, viewers, or electronic equipment, together with accompanying
sounds, if any, regardless of the nature of the material objects, such as films or
tapes, in which the works are embodied. (Emphasis added) 17 U.S.C. Sec. 101.

43

The definition demonstrates that "audiovisual works" inherently requires some

type of machine or device and that such machine shall embody as a "copy" such
work. The Act also provided that compilations and "derivative works," terms
later defined, were proper subjects of copyright.

44

Even though "audiovisual works" are proper subjects for copyright, the actual
copyrighting of such audiovisual works and their qualifying for copyright
protection depends on whether the works meet the tests for originality and
fixation, which are declared to be "[t]he two fundamental criteria of copyright
protection" for any work. House Report at 5664. "Fixation," is defined in the
definitional section of the Act thus:

45

A work is "fixed" in a tangible medium of expression when its embodiment in a

copy or phonorecord, by or under the authority of the author, is sufficiently
permanent or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration. A work consisting
of sounds, images, or both, that are being transmitted, is "fixed" for purposes of
this title ... if a fixation of the work is being made simultaneously with its
transmission.

46

The term "fixation in tangible form," as thus defined, is restated in the statutory
definition in the Act of "copies" as "material objects, other than phonorecords,
in which a work is fixed by any method now known or later developed, and
from which the work can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a machine or device. The term

'copies' includes the material object, other than a phonorecord, in which the
work is first fixed."
47

There is no definition for "originality" comparable to that for "fixation," in the

Act. The legislative history, however, demonstrates that Congress purposely
omitted any such definition because it accepted the standards as "established
[for originality] by the courts under the present copyright law [i.e., the Act of
1909]," though it did explain in that connection that "[t]his standard [did] not
include requirements of novelty, ingenuity, or esthetic merit" and added that
"there [was] no intention to enlarge the standard of copyright protection to
require them." House Report at 5664.

48

As we indicated in the statement of facts, the plaintiff had applied for and had
been granted a certification of copyright of its video game Hi-Lo Double-Up
Joker Poker with Flasher, Model II, as a derivative work under the category of
"audiovisual works." It is that copyright which it claims the defendants have
infringed. Such copyright, thus granted by the Copyright Office, is prima facie
proof of the validity of plaintiff's copyright, including the existence of the
elements of originality and fixation. The defendants, in response to the
plaintiff's charge of infringement raise a number of defenses challenging the
qualifications of Kramer's work for copyright. The initial defense (1) was that
plaintiff's work was not copyrightable because it was a "process," "system,"
"game," or "idea," and, therefore, not copyrightable under section 102(b), (2) it
lacked originality, and (3) that, though not directly stated, there was a want of
fixation. The defendants, in disputing the validity of such copyright on those
grounds, have the burden of overcoming the presumption arising out of the
granting of the copyright by the Copyright Office. 17 U.S.C. Sec. 410(c);
Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1019 (9th
Cir.1985); Murray v. Gelderman, 566 F.2d 1307, 1311 (5th Cir.1978); Atari,
Inc. v. Amusement World, Inc., 547 F.Supp. 222, 225 (D.Md.1981). The
district court sustained all the claims of the defendants and found the
presumption of validity rebutted. We examine the soundness of the grounds on
which the district court rested its decision that the plaintiff's work was not
copyrightable.

49

The district court found that the video game in this case was not copyrightable
because it was a "system or manner of playing a game" or "description of a
game" and was simply an "idea," and "game." It predicates this conclusion
basically on subsection (b) of section 102.10 We find such reliance
unwarranted. We base this determination on the limited purpose of the
subsection itself as stated in its legislative history. The Committee Notes
accompanying such subsection recognized this limited scope of the subsection,

declaring that, "Section 102(b) ... in no way enlarges or contracts the scope of
copyright protection under the present law. Its purpose is to restate, in the
context of the new single Federal system of copyright, that the basic dichotomy
between expression and idea remains unchanged." In effect, what Congress
intended in this subsection was simply a codification of the statement made by
the Supreme Court in Mazer v. Stein, 347 U.S. at 207, 74 S.Ct. at 465;11 that
copyright protection extended "only to the expression of the idea--not the idea,"
thus distinguishing between "idea" and "expression," between "methodology or
processes" and "writings," and, in effect, between patentability and
copyrightability. That this is the proper construction of the subsection is
manifest from the language of the House Report (p. 5670): "Section 102(b) is
intended, among other things, to make clear that the expression adopted by the
programmer is the copyrightable element in a computer program, nd that the
actual processes or methods embodied in the program are not within the scope
of the copyright law." (Emphasis added) The legislative purpose thus declared
was to accord copyrightability to such of the computer program, whether
represented in a video game or otherwise, as might be considered "expression"
under the enlarged definition given such term in the fixation clause of the Act.
And that is the construction which has been given the subsection in all the
recent decisions.
50

Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1250-51 (3d
Cir.), cert. denied, 464 U.S. 1033, 104 S.Ct. 690, 79 L.Ed.2d 158 (1984) is
illustrative of these recent cases, which have held that computer programs12 are
not to be denied copyrightability as a "process," or "system," precluded from
registration under section 102(b). In that case, the court, reversing a district
court which had ruled similarly to the district judge in this case, 545 F.Supp.
812 (E.D.Pa.1982), said:

51

Franklin [the defendant] argues that an operating system program is either a

"process," "system", or "method of operation" and hence uncopyrightable.
Franklin correctly notes that underlying section 102(b) and many of the
statements for which Baker v. Selden is cited is the distinction which must be
made between property subject to the patent law, which protects discoveries,
and that subject to copyright law, which protects the writings describing such
discoveries. However, Franklin's argument misapplies that distinction in this
case. Apple does not seek to copyright the method which instructs the computer
to perform its operating functions but only the instructions themselves....

52

Since it is only the instructions which are protected, a "process" is no more

involved because the instructions in an operating system program may be used
to activate the operation of the computer than it would be if instructions were

written in ordinary English in a manual which described the necessary steps to

activate an intricate complicated machine.
53

After all, as the court in Apple Computer, Inc. v. Formula Int'l, Inc., 562
F.Supp. 775, 780 (C.D.Cal.1983), aff'd., 725 F.2d 521 (9th Cir.1984), stated
"all computer programs [whether in a video game or other work] as embodied
in ROMs and diskettes are designed to operate a machine in such a way as to
ultimately produce some useful communication to the user--that is their
purpose," i.e., to express. (Emphasis in text) Because of this, the fact that "the
words of a program [as expressed through the computer program] are used
ultimately in the implementation of a process should in no way affect their
copyrightability." 725 F.2d at 524. That the method of expression is by way of
a computer "device" or "machine" is immaterial in view of the revised language
in the 1976 Act, which expressly brings within the standards of copyrightability
communications made "with the aid of a machine." We find the plaintiff's work
is not precluded from copyright under the provisions of section 102(b).

54

The district court, also, suggests that, "video games" are never copyrightable
and that for this reason the plaintiff's copyright which in effect covers a video
game is invalid. Strictly speaking the game, the idea of the game, itself is not
protected but the shape and characteristics of the cards and the "shapes, sizes,
colors, sequences, arrangements and sounds [that] provides something 'new or
additional over the idea' " are protected. Atari, Inc. v. North American Phillips
Consumer Electronics, Corp., 672 F.2d at 617. The decisions to this effect are
so numerous that video games13 may be validly copyrighted as "audiovisual
works" under this reasoning that the court in Midway Mfg. Co. v. BandaiAmerica, Inc., 546 F.Supp. 125, 139 (D.N.J.1982),14 said: "It is also
unquestionable that video games in general are entitled to copyright protections
as audiovisual works," and the court in Midway Mfg. Co. v. Artic Intern. Inc.,
704 F.2d 1009, 1012 (7th Cir.1983) declared:

55 thus conclude that video games are copyrightable as audiovisual works under
We
the 1976 Copyright Act and we note that every other federal court (including our
own) that has confronted this issue has reached the same conclusion.
56

At the time of decisions in Bandai and Artic, the courts in Atari, Inc. v. North
American Phillips Consumer Electronics Corp., 672 F.2d 607, 615 (7th Cir.),
cert. denied, 459 U.S. 880, 103 S.Ct. 176, 74 L.Ed.2d 145 (1982); Stern
Electronics, Inc. v. Kaufman, 669 F.2d 852, 856 (2d Cir.1981); Midway Mfg.
Co. v. Dirkschneider 543 F.Supp. 466, 479 (D.Neb.1981); Atari, Inc. v.
Amusement World, Inc., 547 F.Supp. 222, 226-27 (D.Md.1981); and Midway
Mfg. Co. v. Artic Intern. Inc., 547 F.Supp. 999, 1008-09 (N.D.Ill.1982) had

clearly declared video games copyrightable as audiovisual works. We,

accordingly agree with the court in Bandai-America, 546 F.Supp. at 139, that
under the authorities copyrightability of video games as audiovisual works
cannot be disputed.15 Nor can it be denied that the plaintiff's works meet the
statutory definition of audiovisual works.
57

The finding that the plaintiff's work was an "idea" within the contemplation of
Mazer and section 102(b) is also untenable. Mazer, it is true, makes a
distinction between "idea" and "expression" and declared that the former is not
copyrightable whereas the latter is. It is sometime difficult to distinguish
between the two concepts of "idea" and "expression." In the computer area with
which we are concerned in this case, Apple Computer, Inc. v. Franklin
Computer Corp., 714 F.2d 1240, 1253 (3d Cir.), cert. denied, 464 U.S. 1033,
104 S.Ct. 690, 79 L.Ed.2d 158 (1984), has formulated the accepted test for
distinguishing between the two concepts. If there is only one way to express the
idea, "idea" and "expression" merge and there is no copyrightable material. In
this Apple follows the rule enunciated in Morrissey v. Proctor & Gamble
Company, 379 F.2d 675, 678-79 (1st Cir.1967), a case cited and relied on by
the district court in this case. But, on the other hand, as Apple states it: "If other
programs can be written or created which perform the same function as [the
programer's] operating system program, then that program is an expression of
the idea and hence copyrightable," 714 F.2d at 1253. And, in the computer field
"[t]here exists a virtually unlimited number of instruction sequences that would
enable a programmer to construct a program which performs even the more
basic algorithmic or mathematical procedures." Note, Computer Copyright
Law: An Emerging Form of Protection for Object Code Software after Apple v.
Franklin, 5 Computer L.J., 233, 251 (1984). It follows, therefore, that normally
in the computer field, courts are concerned with expression and not idea, as
those terms are defined in copyright law. This fact was recognized by the first
court of appeals to review the copyrightability of video games as audiovisual
works, operated as a computer program, Stern Electronics, Inc. v. Kaufman,
669 F.2d at 855. In that case, the Court said:

58
Omni
contends that Konami was entitled to copyright only the written computer
program that determines the sights and sounds of the game's audiovisual display.
While that approach would have afforded some degree of protection, it would not
have prevented a determined competitor from manufacturing a "knock-off" of
"Scramble" that replicates precisely the sights and sounds of the game's audiovisual
display. This could be done by writing a new computer program that would interact
with the hardware components of a video game to produce on the screen the same
images seen in "Scramble," accompanied by the same sounds. Such replication is
possible because many different computer programs can produce the same "results,"

whether those results are an analysis of financial records or a sequence of images

and sounds. A program is simply "a set of statements [i.e., data] or instructions to be
used directly or indirectly in a computer in order to bring about a certain result,"
Pub.L. No. 96-517, Sec. 10(a), 94 Stat. 3015, 3028 (1980) (amending 17 U.S.C.App.
Sec. 101 (1976)). To take an elementary example, the result of displaying a "4" can
be achieved by an instruction to add 2 and 2, subtract 3 from 7, or in a variety of
other ways. Obviously, writing a new program to replicate the play of "Scramble"
requires a sophisticated effort, but it is a manageable task.
59

Plaintiff's work here was thus "expression" and not "idea" and section 102(b)
did not preclude its copyrightability.

60

The district court next would invalidate plaintiff's copyright for lack of
originality. Plaintiff's work is stated by the district court to be a derivative work
and the plaintiff accepts the characterization.16 In determining originality in a
derivative work or a compilation, it is proper to look ordinarily only to those
elements in the work which are original with the copyright claimant. This is the
purport of section 103(b) of the Act: "The copyright in a compilation or
derivative work extends only to the material contributed by the author of such
work, as distinguished from the preexisting material employed in the work, and
does not imply any exclusive right in the preexisting material." As Professor
Nimmer explicates the section: "If the underlying work is itself protected by
copyright, then the copyright in the derivative work or collection will neither
nullify nor extend the protection accorded to the underlying work. If the
underlying work is in the public domain, a copyright in the derivative work will
not render the underlying work protectible. Thus copyright in a derivative or
collective work merely protects against copying or otherwise infringing the
particular compilation or arrangement of a collective work, or the original
contribution contained in the derivative work." 1 M. Nimmer, Nimmer on
Copyright, Sec. 3.04 at 3-15-6. It follows that, in resolving originality in this
case, we are to look to the new material added to the underlying material in the
derivative work by the plaintiff.17

61

The classic precedent for determining originality in copyright law is Alfred

Bell & Co. v. Catalda Fine Arts, 191 F.2d 99, 102-03 (2d Cir.1951). The court
in that case said that in copyright law "[a]ll that is needed to satisfy [the
originality requirement under] both the Constitution and the statute is that the
'author' contributed something more than a 'merely trivial' variation, something
recognizably 'his own.' Originality in this context 'means little more than a
prohibition of actual copying.' No matter how poor artistically the 'author's
addition", it is enough if it be his own." The Court in that case relied on and
quoted extensively from Henderson v. Tompkins, 60 Fed. 758, 765

(C.C.D.Mass.1894). cited with approval by the Supreme Court in Bleistein v.

Donaldson Lithographing Co., 188 U.S. 239, 250, 23 S.Ct. 298, 300, 47 L.Ed.
460 (1903):
62
There
is a very broad distinction between what is implied in the word "author,"
found in the constitution, and the word "inventor." The latter carries an implication
which excludes the results of only ordinary skill, while nothing of this is necessarily
involved in the former. Indeed, the statutes themselves make broad distinctions on
this point. So much as relates to copyrights * * * is expressed, so far as this
particular is concerned, by the mere words, "author, inventor, designer or
proprietor," with such aid as may be derived from the words "written, composed or
made," * * *. But a multitude of books rest safely under copyright, which show only
ordinary skill and diligence in their preparation. Compilations are noticeable
examples of this fact. With reference to this subject, the courts have not undertaken
to assume the functions of critics, or to measure carefully the degree of originality,
or literary skill or training involved.
63

In line with these principles, courts have said that in the copyright context the
standard for originality of a compilation or derivative work is "minimal" and of
"a low threshold," (Original Appalachian Artworks, Inc. v. Toy Loft, 684 F.2d
821, 824 (11th Cir.1982)), and is "modest at best" (Thomas Wilson & Co. v.
Irving J. Dorfman Co., 433 F.2d 409, 411 (2d Cir.1970)). The requirement is
satisfied if the new material or expression has what the Court in Dan Kasoff,
Inc. v. Novelty Jewelry Co., 309 F.2d 745, 746 (2d Cir.1962) said was a "faint
trace of 'originality' " and if it provides a "distinguishable variation," Merritt
Forbes & Co. v. Newman Securities, 604 F.Supp. 943, 951 (S.D.N.Y.1985).
Compilations are excellent examples of the minimal nature of the originality
requirement in the computer field. "Copyright protection may extend to such a
compilation, even if the material of which it is composed is not copyrightable
itself or is already subject to previous copyright"; it is sufficient "if original
skill and labor is expended in creating the work. The mere fact that component
parts of a collective work are neither original to the plaintiff nor copyrightable
by the plaintiff does not preclude a determination that the combination of such
component parts as a separate entity is both original and copyrightable." Apple
Barrel Productions, Inc. v. Beard, 730 F.2d 384, 387-88 (5th Cir.1984). Thus,
facts as such may not be copyrighted but, if there is originality in arrangement
or selection of facts, such as in a telephone directory, the directory may be
copyrighted. Hutchinson Telephone Co. v. Fronteer Directory Co., 770 F.2d
128, 132 (8th Cir.1985); Rockford Map Pub. v. Dir. Service Co. of Colo., 768
F.2d 145, 148-49 (7th Cir.1985); Financial Information, Inc. v. Moody's
Investors, 751 F.2d 501, 507 (2d Cir.1984); Eckes v. Card Prices Update, 736
F.2d 859, 862-63 (2d Cir.1984); West Publishing Co. v. Mead Data Control,

Inc., 616 F.Supp. 1571 (D.Minn.1985); Rand, McNally & Co. v. Fleet
Management Systems, 591 F.Supp. 726, 732-33 (N.D.Ill.1983), and 600
F.Supp. 933 (N.D.Ill.1984). In Rockford Map Publishers, the Court said (768
F.2d at 148-149):
64the incremental contribution is small, so too is the reward, but a subjective
If
assessment of the importance of the contribution has nothing to do with the existence
of copyright.
***
65
66

The contribution of a collection of facts lies in their presentation, not in facts

themselves. The collector may change the form of information and so make it
more accessible, or he may change the organization and so make the data more
understandable. A catalog of names and addresses is copyrightable ... as is a
directory of trade symbols ... and a compilation of logarithms.... In each case
the copyright depended on the fact that the compiler made a contribution--a
new arrangement or presentation of facts--and not on the amount of time the
work consumed.

67

Gelles-Widmer Company v. Milton Bradley Company, 313 F.2d 143, 147 (7th
Cir.), cert. denied, 373 U.S. 913, 83 S.Ct. 1303, 10 L.Ed.2d 414 (1963), is
particularly apt in this context since copyright protection in flashcards
containing standard mathematical equations and their answers was upheld. The
court held that the basic mathematical calculations were in the public domain
and were not copyrightable but that "the basic materials and arithmetical
problems may have been old and in the public domain, but we agree with
plaintiff's argument that the arrangement, the plan and the manner in which
they were put together by the author, does constitute originality." It is, also,
important that, in reviewing a derivative work for originality, it is not sufficient
to consider the matter by looking at the component parts: the work must be
reviewed as a whole, not just reviewed or analyzed part by part. Apple Barrel
Productions, Inc. v. Beard, 730 F.2d at 387-88.

68

The district court offers few clues to its standard for originality. The nearest it
comes seems to be that for originality "true artistic skill is required" in the
copyright context. It cites L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d
Cir.1976) for this conclusion. It is true that Batlin does use the phrase "true
artistic skill," but it was using it in connection with a copyright issued for a
"work of art." No doubt the language was appropriate in that connection but it
is not relevant where the work is copyrighted as "audiovisual works," for
instance. In Gracen v. Bradford Exchange, 698 F.2d 300, 304 (7th Cir.1983),

the court cautioned that "artistic originality is not the same thing as the legal
concept of originality in the Copyright Act," and, in Bleistein, 188 U.S. at 251,
23 S.Ct. at 300, Justice Holmes warned that "[i]t would be a dangerous
undertaking for persons trained only to the law to constitute themselves final
judges of the worth of pictorial illustrations, outside of the narrowest and most
obvious limits." "Works of art" as a subject of copyright are specially defined in
section 101 and have also been specially defined from time to time in the Rules
and Regulations of the Copyright Office. See Carol Barnhart, Inc. v. Economy
Cover, Corp., 773 F.2d 411 (2d Cir.1985). "Audiovisual works" have been
separately defined in section 101 and in the decisions and are plainly different
from the definition of "works of art" in the Act.
69

That the language in Batlin related explicitly to "works of art" is clearly

inferable from the language by the same court in its discussion of Batlin in the
later case of Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 910 (2d
Cir.1980), at 910, in which the court, recognizing the obvious distinction
between a "work of art" and other forms of expression, said the originality
requirement in connection with a "work of art" is not satisfied by a
"demonstration of some 'physical' as opposed to 'artistic' skill," and even more
in Carol Barnhart. If "true artistic skill" were an absolute requirement for all
copyrights--which is apparently what the district court assumed--many works,
such as directories as in Hutchinson Telephone, 770 F.2d 128, or the maps in
Rockford Map Publishers, 768 F.2d 145, or perhaps even flashing cards as in
Gelles-Widmer, 313 F.2d 143, could not have been copyrighted.

70

The district court further seems to assume that, if the copyright work consisted
only of the underlying works and if the various components of an underlying
work were in the public domain and not copyrighted, then a derivative work
could not be considered copyrightable under the originality test. In developing
this thesis, the district court purported to review all the underlying works
involved in plaintiff's derivative work, save the flashing cards, and concluded
all were in the public domain. It concluded, therefore, in line with its assumed
rule of copyright law, that plaintiff's derivative work lacked originality and was
not copyrightable. As the Court said in Apple Barrel Productions, 730 F.2d at
387-88, copyrightability of a compilation or derivative work does not turn on
whether the component parts of the collective work are original or in the public
domain. Section 103 of the Act makes this plain. It declares that the validity of
a copyright of a compilation or derivative work depends on the originality of
the compiler's individual contribution to the work or material regardless of
whether the individual items in the material have been or ever could have been
subject to copyright. It follows that the validity of plaintiff's copyright does not
depend on the copyrightability of the components represented by the

underlying work but by the originality of its own contribution to the

copyrighted work.
71

Tested by the standards for originality established in the decisions and in the
district court's own findings of fact, it is manifest that the plaintiff's work
qualified as original under the Copyright Act. The district court found that the
changes, additions, and modifications, which resulted in the Hi-Lo feature and
which represented Kramer's additions to the underlying works, introduced a
completely separate game, adding the flashing card feature in the play mode,
which is a series of card faces with suits and symbols flashing rapidly in
succession, and modifying the screen display, resulting in a split screen
showing both the poker hand being played and the options available. Those
changes and additions were not "trivial"; they demonstrated more than a "taint
of originality." Unlike the backgammon board denied copyrightability for lack
of originality in the leading case of Chamberlin v. Uris Sales Corporation, 150
F.2d 512, 513 (2d Cir.1945) in which the addition was said to have been "so
minute as to escape the attention of the ordinary observer," the additions here
were strikingly different and plainly discernible to the most casual observer.
These undisputed facts, as found by the district court, establish that plaintiff's
work met the test of originality under the Act. See Hutchinson Telephone Co.
v. Fronteer Directory Co., 770 F.2d at 132.

72

"Fixation" is an essential element of copyrightability in the same way

originality is. The district court did not find expressly that plaintiff's work was
not "fixed" and therefore uncopyrightable. It could, however, be argued that it
did indirectly so rule and, before concluding a discussion of the copyrightability
of plaintiff's work, it is in order for us to consider whether the district court did
indirectly find an absence of fixation in plaintiff's work. This "indirect" ruling
on fixation arose in connection with a pre-trial motion of the plaintiff. The
plaintiff moved to be permitted to file an amendment alleging the issuance to it
of a copyright for its computer program which implemented its audiovisual
works. That motion was resisted by the defendants, who, in objecting,
requested the district court to enter an order excluding from the evidence
"Plaintiff's new copyright registration TXu 142-685 [plaintiff's computer
program] and related allegations for inclusion at trial of this matter." The
district court denied the plaintiff's motion and granted in full the defendants'
motion. It based this ruling on the ground that the audiovisual aspects and the
computer program which produces the audiovisuals are "separately
copyrightable" and, because they are "separately copyrightable," an
infringement action based on a copyright of the audiovisual works does not
involve the computer program which implements the audiovisual works. It,
therefore, held that any reference to such computer program would be

inadmissible. Specifically, it concluded that the registration of the audiovisual

works of the plaintiff did not cover "the underlying computer program."18 If
this ruling is correct, then the plaintiff's work would fail the fixation
requirement, since it relies on the computer program to supply the essential
element of fixation. For this reason it would seem that we should address this
ruling in determining the copyrightability of plaintiff's work.
73

What the district court held, as we read its opinion, was that the audiovisual
copyright protection granted the plaintiff under its initial copyright did not
extend to the computer program which implements the audiovisuals. And it
based this on the ground that the computer program may be separately
copyrighted, as Midway Mfg. Co. v. Strohon, 564 F.Supp. 741, 749
(N.D.Ill.1983), held and as recognized by the plaintiff--at least since the 1980
amendments.

74

But the fact that the computer program could have been separately copyrighted
does not mean that the audiovisual copyright may not protect the computer
program which implements the audiovisuals any more than the issuance of a
patent will not necessarily render a work non-copyrightable, see Mazer v. Stein,
347 U.S. at 217, 74 S.Ct. at 470, and Stern Electronics, Inc. v. Kaufman, 669
F.2d at 856.19 The computer program or "memory device" is the form in which
the audiovisuals are "permanently embodied" and are fixed in a tangible
medium of expression "capable of being" reproduced or otherwise
communicated, "either directly or with the aid of a machine or device." The
"memory device," or computer program, is an essential element of the
audiovisual copyright, satisfying the "fixation" requirement for the issuance of
a copyright and, as a "copy," within the statutory definition, it is specifically
protected from infringement under the audiovisual copyright. See 17 U.S.C.
Sec. 106(1). As the Court said in Kaufman, "The [video game's] display
satisfies the statutory definition of an original 'audiovisual work', and the
memory devices of the game satisfy the statutory requirement of a 'copy' in
which the work is 'fixed.' " (Emphasis added) To the same effect is Williams
Electronics, Inc. v. Artic International, Inc., 685 F.2d 870, 874 (3d Cir.1982);
Midway Mfg. Co. v. Dirkschneider, 543 F.Supp. at 480; and Atari, Inc. v.
Amusement World, Inc., 547 F.Supp. at 226. In Dirkschneider the Court said
(p. 480):

75

Under these statutory provisions, it is clear that the plaintiff's audiovisual

works are fixed in the printed circuit boards. The printed circuit boards are
tangible objects from which the audiovisual works may be perceived for a
period of time more than transitory. The fact that the audiovisual works cannot
be viewed without a machine does not mean the works are not fixed. The Court

therefore is of the opinion that the plaintiff's audiovisual works are fixed, and
thus may be copyrighted.
76

If that were not so, then the audiovisual copyright would be invalid because not
"fixed in a tangible form" and, therefore, lacking the essential element of
"fixation." Moreover, under the construction of the district court, most of the
decisions sustaining video games as audiovisual works would be wrongfully
decided, for, particularly in the early years, the "author" copyrighted only his
audiovisual works and not his "memory device" or computer program.

77

As a matter of fact, the defendant in Kaufman contended that the audiovisuals

were not copyrightable because they were not "fixed" and that "only the written
computer program that determines the sights and sounds of the game's
audiovisual display" was copyrightable, and that, since the computer program
had not been copyrighted, the suit for infringement must fail for want of a valid
copyright. 669 F.2d at 855-56. This argument is what in effect the district court
concluded on this point. We agree with the Second Circuit that the argument is
untenable. As we have said, the "memory device" or computer program
qualifies as a copy of plaintiff's audiovisual work and as such is protected under
the plaintiff's copyright. See 17 U.S.C. Sec. 106(1). That was precisely what
Judge Young held in Amusement World and we agree.

78

It follows that the district court in this case could properly consider in
connection with an alleged infringement of an audiovisual copyright both the
audiovisuals and their implementing computer program. To be specific, we
hold that a copyright in the audiovisual display, which display is created by a
computer program, protects not only the audiovisual from copying, but also the
underlying computer program to the extent the program embodies the game's
expression. The program, as we have noted, is, by definition a "copy" under the
Act, and the Act grants to the copyright holder the exclusive right to reproduce
copies or derivatives of the copyrighted work. 17 U.S.C. Sec. 106(1). When an
infringer copies the computer program and reproduces the expression embodied
in the audiovisuals, he has infringed the copyright holder's exclusive rights--this
is the purport of the Act itself.

79

The district court raised two other minor points to support its finding of
uncopyrightability in this case which, perhaps, should be noted. It apparently
would impeach the issuance of plaintiff's copyright because the Copyright
Office had earlier denied a copyright for the Foy/Storino work, a work which
incidentally did not include the several variations, such as the "flashing cards,"
already noticed, an addition made in plaintiff's work. We fail to find any
significance in the refusal of the Copyright Office to grant a copyright for

another work which was significantly different from the one the Copyright
Office later copyrighted. The important fact is that the Copyright Office did
copyright the plaintiff's work as an audiovisual work. The district court also
finds that the Copyright Office, even though it had issued a copyright for
plaintiff's work, really agreed with the district court that the plaintiff's work
was not copyrightable. The rationale for this conclusion seems to be a feeling
not directly expressed by the district court that the Copyright Office was in
some way misled by plaintiff's patent counsel. The defendants' expert witness,
on whom the district court appears to have relied heavily, and who was well
versed in copyright practice, did not support this theory, nor did the district
court find any reasonable basis for such a finding in the record. The expert
witness however, advanced one equally implausible. He would fault the
examiners in the Copyright Office by asserting that they recommended a
copyright for plaintiff's work because it was a "new technology," that they
didn't "know what to do with video games" because "[t]hey're not used to them"
and that, for those reasons, the registration had no "greater significance than
that." When at least three courts of appeals had already found video games
copyrightable and stated the reasons for their conclusion, we find it impossible
to conclude that the examiners in the Copyright Office were so unversed that
they didn't know what to do with video games and therefore copyrighted them
apparently out of frustration. Accordingly, we dismiss these contentions as
without merit on the issue of copyrightability of plaintiff's work.
80

From what has been said, we are of opinion that, based on settled principles of
law and the undisputed facts in the case, the evidence conclusively sustained
the validity of plaintiff's copyright. In Hutchinson Telephone Co. v. Fronteer
Directory Co., 770 F.2d at 132, the court, in sustaining copyrightability, said:

81

Because we find these undisputed facts to establish that Hutchinson's directory

is an original work of authorship we may decide the issue of copyrightability
and no remand to the District Court on this issue is necessary. Where the facts
on which an issue must be decided are undisputed, an appellate court may
reverse on that issue without a remand. (citing case)

82

We hold, therefore, that Hutchinson's telephone directory is an original work of

authorship and therefore is copyrightable under the provisions of 17 U.S.C.
Sec. 102.

83

Such, also, is this case and we hold that plaintiff's work was copyrightable.

VI. Forfeiture

84

Having determined the district court's analysis and determination of the validity
of the plaintiff's copyright to be in error, we must now address whether the
district court properly found that copyright protection was forfeited due to the
plaintiff's failure to place a proper copyright notice on the game. The omission
of copyright notice places the work in the public domain unless the omission is
excused under 17 U.S.C. Sec. 405(a), which saves the validity of the copyright
if:

85 the notice has been omitted from no more than a relatively small number of
(1)
copies or phonorecords distributed to the public; or
86 registration for the work has been made before or is made within five years after
(2)
the publication without notice, and a reasonable effort is made to add notice to all
copies or phonorecords that are distributed to the public in the United States after the
omission has been discovered....
87

Kramer Manufacturing does not contend that it distributed "a relatively small
number" of games without the proper copyright notice as contemplated under
subsection (a)(1). There is, however, no dispute that the first requirement of
subsection (a)(2) was met--Kramer Manufacturing registered its audiovisual
copyright within five years of the first publication without proper notice.
Kramer Manufacturing contends, and we agree, that the district court
erroneously concluded that it had failed to make a reasonable effort to add a
proper copyright notice after discovering the insufficiency of the notice that
was placed on the games.

88

Prior to the fall of 1981, the audiovisuals contained no copyright notice

whatsoever. During that fall, Battaglia encoded into the underlying computer
program the phrase "M. Kramer, Inc. 9-24-80" as an attempt at applying the
proper copyright notice. That notice, though, lacked the requisite formalities,20
since not being legible to an ordinary user of the work under normal conditions
of use as required by 37 C.F.R. Sec. 201.20(c)(1) (1984), (see 17 U.S.C. Sec.
401(c) (authorizing Register of Copyrights to specify notice requirements) ),
since the notice did not appear unless the game board buttons were pushed in an
abnormal sequence. Later that year, Kramer placed the notice "Copyright
applied for" on the outside of the ROMs contained within the game console
upon the advice of an attorney. Contrary to the attorney's opinion, that notice
was also formally deficient and improperly placed.

89

In February 1983, Kramer Manufacturing discovered the insufficiency of the

above notice and inserted a proper, visible notice into the attract mode of the
audio visual display.21 This is the date from which the determination of

reasonable effort to give notice is to be judged. The district court held that
Kramer Manufacturing's effort to add copyright notices after this discovery was
not reasonable. The court gave as the sole reason for such finding that "there
was no effort made to apply a proper notice to plaintiff's games located in its
regional warehouses; to add proper notices to games in the possession of
distributors; nor to send out replacement programs that included a proper
notice." The reasonableness of an author's effort to add copyright notice is
generally a question of fact. 2 Nimmer on Copyright Sec. 7.13[B]. We reverse
this finding of the district court on which it rested its finding that Kramer's
notice was not reasonable. We do so because, contrary to the district court's
rationale for its conclusion, an author is not required as a matter of law to send
out replacement programs; the district court's conclusion, resting as it does on a
false legal premise that Kramer Manufacturing's effort was not reasonable was
clearly erroneous. The statute requires only a reasonable effort to affix a proper
notice to copies that are "distributed to the public .... after the omission has
been discovered." The holder of copyright has no duty, based on this language,
to add a notice to copies that have already been distributed and therefore has no
duty to send out replacement programs for games that have already been
distributed to the public. The reasonableness of Kramer Manufacturing's effort,
therefore, is unaffected by its failure to replace ROMs that had already been
distributed with ROMs bearing a proper copyright notice. Furthermore, even if
we were to consider that lack of effort relevant to the reasonableness of Kramer
Manufacturing's overall effort, Kramer testified that whenever a computer game
board was returned for repair, the technicians would remove not only the
defective ROM, but also remove all the ROMs that did not contain a proper
copyright notice and replace them all with ROMs containing proper notice.
Replacing those ROMs that were not defective and that had only been returned
because they were an integral part of the console board exceeds the
requirements of section 405(a)(2), because those ROMs had already been
distributed to the public. Thus, there was no lack of reasonable effort on that
account.
90

Based on the statutory language, a copyright owner does have an obligation to

add copyright notice to games that are stored or that have been distributed to
retail dealers but not yet to the public. But, "[i]n any event, no more than 'a
reasonable effort' need be expended in remedying the omission of notice on
later distributed copies and phono records." 2 Nimmer on Copyright Sec.
7.13[B]; see also, Shapiro & Son Bedspread Corp. v. Royal Mills Associates,
764 F.2d 69, 74 (2d Cir.1985). The trial judge was clearly in error to conclude
that Kramer Manufacturing's effort was less than reasonable. The company had
no retail distributors; it sold directly to the public. Although there were some
games that were not yet in the hands of the consuming public, the

uncontradicted testimony was that those games that were in storage were
merely awaiting delivery. The company had sold those games as part of a lot
sale and was merely awaiting payment on that portion of the lot that was in
storage. The company acted immediately upon discovering the omission; there
is no evidence that it dallied or sold any games after that discovery. See
Gemveto Jewelry Co. v. Jeff Cooper, Inc., 568 F.Supp. 319 (S.D.N.Y.1983).
Furthermore, only three or four games were sold prior to the discovery of the
omission of copyright notice but delivered after the discovery. Given Kramer
Manufacturing's other efforts to attach notice, which included, in addition to
that described above, stopping production of the game for a substantial period
of time while a proper copyright notice was encoded in the ROMs controlling
the audiovisual display, we hold that its efforts were reasonable as a matter of
law, and we reverse the contrary findings of the district court. See Videotronics,
Inc. v. Bend Electronics, 586 F.Supp. 478, 483 (D.Nev.1984).
VII. Infringement
91

We now turn to the district court's findings regarding infringement, which we

quote in full:

92

Even if Plaintiff's copyright was valid and had not been forfeited, Defendants'
acts would not constitute infringement. In order to prove infringement of a
copyright, it is necessary to prove ownership and that the Defendants copied
Plaintiff's work. 17 U.S.C. Sec. 106. Plaintiff may prove access plus substantial
similarity in order to establish copying. Midway v. Bandai, supra. Access has
been established which leaves the issue of substantial similarity for resolution.
The scope of any alleged copyright in this case must be narrowly construed in
order to prevent unnecessary restrictions on the public from using the idea or
method of the game. Atari v. North American Phillips Consumer Electronics,
672 F.2d 607 (7th Cir.1982). Here, Defendants used different phraseology in its
audiovisual presentation, modified the playing cards, added "LE" to the back of
the cards, and inserted "Lynch Enterprises, Inc." into the attract mode of the
game. The Court is of the opinion that there is a lack of substantial similarity
between the Plaintiff's audiovisual in its Hi Lo Double Up Joker Poker with
Flashing Card and Defendants' game and there would be no infringement even
if the copyright was valid.

93

As we have seen, the plaintiff's copyright in the game's audiovisuals protects

not only the audiovisuals, but also the computer program, which is embodied in
the ROM and, in which the audiovisual is fixed, because the audiovisuals may
be reproduced from the ROM with the aid of a microprocessor. Because the
audiovisual is fixed in the computer program, the computer program underlying

the audiovisual constitutes a copy of the audiovisual. It necessarily follows

from that holding that the audiovisual copyright may be infringed in one of two
ways: The infringer may copy the audiovisuals themselves or the infringer may
copy the underlying computer program. In this case the undisputed evidence
conclusively establishes that the defendants copied both.
94

Copying is ordinarily, due to the lack of direct evidence, established by proof

that the defendant had access to the plaintiff's work and produced a work that is
substantially similar to the plaintiff's work. 3 Nimmer on Copyright Sec.
13.01[B]. That the defendants had access to both the audiovisuals and the
underlying computer program is not denied in this case. Thus the district court
addressed only whether the defendants game was substantially similar to
Kramer Manufacturing's game, that is, whether sufficient indirect evidence of
copying was presented. The district court, however, lost sight of the ultimate
issue--whether Drews Distributing copied the plaintiff's game. If there was
clear proof of actual copying by the defendants, that is the end of the case. As
we have said, because evidence of actual copying is usually not available,
infringement or copying is proved indirectly, through proof of access and
substantial similarity. This case is unusual, however, in that compelling
substantial direct evidence of copying was presented. Furthermore, the district
court, when determining whether the two games were substantially similar,
analyzed only the audiovisual portions of the game. As discussed above, the
audiovisual copyright also protects the underlying computer program.

95

Andrews first provided Lynch with a ROM that was clearly marked with
Kramer Manufacturing's name, albeit an improper copyright notice. Because
Lynch refused to copy that ROM Andrews procured another ROM, ostensibly
from SMS, which was, in fact, a copy of the Kramer Manufacturing ROM. We
have held that the ROM is a copy, within the meaning of the copyright act, of
the audiovisual display of the game. Because the ROM is also an embodied
copy of the computer program, Apple Computer, Inc. v. Franklin Computer
Corp., 714 F.2d 1240, 1248 (3d Cir.1983), cert. dismissed, 464 U.S. 1033, 104
S.Ct. 690, 79 L.Ed.2d 158 (1984); Williams Electronics, Inc. v. Artic
International, Inc., 685 F.2d 870, 877 (3d Cir.1982), evidence regarding the
similarity of both the audiovisual displays of the two games and the similarity
of the underlying computer programs is relevant to the issue of copying. An
examination of the computer program print-outs in the record establish this
beyond question that Lynch, acting upon the ROM provided by Andrews,
copied Kramer Manufacturing's game. That the copy employed by Lynch did
not bear Kramer Manufacturing's legend is of no moment. The similarities
between the two programs in the record are so striking that no other conclusion
is possible but that Lynch copied Kramer Manufacturing's game. Copying a

copy of a protected work cannot insulate one from infringement under the
copyright laws. Pye v. Mitchell, 574 F.2d 476 (9th Cir.1978).
96

The computer programs in the record are virtually identical. The dissimilarities
between the plaintiff's program and defendants' alleged infringing program
appear quite obviously to be the result of a studied effort to make minor
distinctions between the two works or, as the court in Tennessee Fabricating
Co. v. Moultrie Manufacturing Co., 421 F.2d 279, 284 (5th Cir.1970), put it,
"to appropriate the plaintiff's design either outright or by frivolous variation."
That effort, in itself, constitutes compelling evidence of copying. Atari, Inc. v.
North American Philips Consumer Electronics Corp., 672 F.2d 607, 618 (7th
Cir.), cert. denied, 459 U.S. 880, 103 S.Ct. 176, 14 L.Ed.2d 145 (1982); Joshua
Meier Co. Albany Novelty Manufacturing Co., 236 F.2d 144, 146 (2d
Cir.1956). As we previously noted, Kramer Manufacturing embedded in its
program a hidden legend that would appear only when the game's buttons were
pressed in an abnormal sequence. The defendants' program shows that the
legend is included in its copy. That reappearing legend combined with the
almost complete duplication of many lines of the object code print-out except
for the wording appearing on the display screen establishes that Lynch copied
the plaintiff's game. Williams Electronics, Inc. v. Artic International, Inc., 685
F.2d 870, 876 n. 6 (3d Cir.1982). The fact that the defendants "added 'LE' to the
back of the cards and inserted 'Lynch Enterprises, Inc.' into the attract mode of
the game"--a fact which largely prompted the district court to conclude there
was not "substantial similarity" in the two programs--demonstrates a manifest
attempt to indicate that the program was different than the plaintiff's. The flaw
in this reasoning is exposed by the hidden legend in plaintiff's program which is
duplicated in defendants' program. The inclusion of this legend proves
conclusively the copying. The courts have consistently viewed evidence of
"common errors" as the strongest evidence of copying. See Callaghan v.
Myers, 128 U.S. 617, 662, 9 S.Ct. 177, 190, 32 L.Ed. 547 (1888); Rexnord, Inc.
v. Modern Handling Systems, Inc., 379 F.Supp. 1190, 1194 (D.Del.1974); Pic
Design Corp. v. Sterling Precision Corp., 231 F.Supp. 106, 111
(S.D.N.Y.1964). Although the reproduction of an error in a directory may result
from copying from an independent source or coincidence, the appearance of the
hidden legend, "9-24-80 M. Kramer Mfg.," in the defendants' game could not
result from anything other than copying the plaintiff's game or a copy of that
game. We find this evidence of a hidden legend to be conclusive proof of
copying and of infringement.

VIII. Claim of Innocent Infringement

97

We also reject the district court's conclusion that any infringement that occurred

was innocent under 17 U.S.C. Sec. 405(b). The court reasoned that because the
plaintiff's games did not display a proper copyright notice, because three people
(Kramer, Foy, and Storino) were all claiming copyright in the game, because
Andrews had received an opinion letter which stated that Storino, if anyone,
had paramount rights in the game, and because three entities were
manufacturing the game when Andrews first began manufacturing the game,
any infringement that might have occurred was innocent. While it is true that
under section 405(b) an innocent infringer who relies on an omission of
copyright notice is immune from damages accrued up to the time he received
actual notice, the statute expressly requires the infringer to prove that he or she
was misled by the omission of notice. Sygma Photo News, Inc. v. High Society
Magazine, Inc., 596 F.Supp. 28, 31 (S.D.N.Y.1984); Aitken, Hayen, Hoffman,
Miller, P.C. v. Empire Construction Co., 542 F.Supp. 252, 260 (D.Neb.1982).
"The underlying postulate of the provision is that one acting with a good faith
assumption 'that a work is in the public domain' and is not copyrightable should
be shielded from unreasonable liability. [citation omitted] However, section
405(b) requires that the innocent infringer show he acted 'in reliance upon an
authorized ... [copy] from which the copyright has been omitted,' and prove he
was misled by the omission. 17 U.S.C. Sec. 405(b)." Ruskin v. Sunrise
Management, Inc., 506 F.Supp. 1284, 1289 (D.Colo.1981). The section is
obviously designed to protect one who relies on a work that appears to be in the
public domain and the copyright owner subsequently discovers and cures the
omission pursuant to section 405(a).
98

Although the innocence of the defendants was a question of fact to be

determined by the trial court, we are convinced that its conclusion was clearly
erroneous. Andrews and Lynch most certainly had "reason to think," H.R.Rep.
No. 1476 at 148, U.S.Code Cong. & Admin.News 1976, p. 5764, that the
computer program was not in the public domain. They admit that three people,
including the plaintiff in this case, were claiming copyrights in the game.
Furthermore, they received a letter in December of 1982 which indicated that
Kramer was claiming a copyright in the game. Most importantly, Lynch
refused to copy the first ROM that Kramer produced because it carried the
Kramer Manufacturing name, albeit in an improper form to satisfy the notice
requirements of the copyright laws. Given these facts we find it impossible to
conclude that the defendants relied on the lack of notice to conclude that the
work was in the public domain. They most certainly knew that many people
were claiming rights in the game, one of whom was the plaintiff. While it may
be that the defendants believed that Kramer did not own a valid copyright in the
game, the evidence is clear that they were not misled by the lack of proper
copyright notice when they knew that various parties were claiming copyrights
in the game.

IX. Trade Dress Infringement

99

We now turn to the plaintiff's trade dress infringement claim. The plaintiff
claims that the defendants, by copying the console in which the game is
housed, the artwork on the glass panel upon which the video graphics are
displayed, and the name "Hi-Lo Double Up Joker Poker", violated section
43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1983).22 The district court
held that because "[t]he [p]laintiff ... failed to prove that the public has come to
recognize its console design as indicating that games housed therein originate
from or are connected with a single source[,] [n]o 'secondary meaning,' which
is a prerequisite to proof of alleged proprietary rights, has been attached to
[p]laintiff's console." The court similarly found that Kramer Manufacturing did
not prove that any secondary meaning had attached to either the name or the
glasswork of the game.

100 Kramer Manufacturing insists, relying primarily on Audio Fidelity, Inc. v. High
Fidelity Recordings, Inc., 283 F.2d 551, 558 (9th Cir.1960), that the
requirement of secondary meaning is satisfied by proof of the defendant's
intentional copying of the trade dress of the plaintiff's product. Cf. Harlequin
Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 950 (2d Cir.1981).
The defendants contend that the trial court was right on both the law and the
facts: evidence of copying is not sufficient to establish secondary meaning and
no facts regarding the public's identification of the game's trade dress with any
particular producer were presented.23 We hold that evidence of intentional,
direct copying establishes a prima facie case of secondary meaning sufficient to
shift the burden of persuasion to the defendant on that issue, and, since the
defendants have offered no credible evidence rebutting this presumption, the
infringement is established.24
101 Section 43(a), although enacted as part of the trademark protection act, does not
apply exclusively to infringement of registered trademarks. Rather, the statute
protects against certain deceptive practices whether or not a trademark is
involved. Boston Professional Hockey Association v. Dallas Cap & Emblem
Manufacturing Co., 510 F.2d 1004, 1012 (5th Cir.), cert. denied, 423 U.S. 868,
96 S.Ct. 132, 46 L.Ed.2d 98 (1975). To enjoin a competitor's use of a particular
trade dress,25 a plaintiff must show two things: that his own trade dress has
acquired a secondary meaning and that there is a likelihood that the defendant's
use of that trade dress will confuse the public. 1 J. McCarthy, Trademarks and
Unfair Competition, Sec. 8:1-:2 (2d ed. 1984). If a particular product's trade
dress has acquired a secondary meaning, then the consuming public associates
that product with a certain producer, and, most importantly, is likely to make
that same association when the trade dress is used on another producer's

product. The public need not be able to identify the name of the manufacturer
that produces the product; it is enough if the public perceives that the product
emanates from a single source. Processed Plastic Co. v. Warner
Communications, Inc., 675 F.2d 852, 856 (7th Cir.1982). "To establish
secondary meaning, a manufacturer must show that, in the minds of the public,
the primary significance of a product feature or term is to identify the source of
the product rather than the product itself." Inwood Laboratories, Inc. v. Ives
Laboratories, Inc., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 2187 n. 11, 72
L.Ed.2d 606 (1982) (citations omitted).
102 The issue with which we are faced is the effect of a showing that the defendant
deliberately copied the plaintiff's trade dress. The district court found that the
glass frontpiece for the Kramer Manufacturing game was sent to a silk-screener
by Andrews or someone at Drews Distributing and was used to create the glass
frontpiece for their game. Andrews testified that when he first saw the design
for the frontpiece even he was concerned about their similarity. The only
difference between the two games is a change in the color of the lettering "HiLo Double Up Joker Poker." The bottom half of the letters on the Drews
Distributing model are silkscreened blue while the letters on the Kramer game
are silkscreened either red or a combination of red and blue. Other than slight
differences in color and shadings, which result from slight changes in the
silkscreening process, the two glass frontpieces are identical. It is clear beyond
doubt that Drews Distributing copied Kramer's frontpiece. There is testimony,
too, that the Kramer console was sent by someone at Drews Distributing to a
cabinetmaker who duplicated it for Drews Distributing's use.
103 Some courts have held that evidence of "palming off," or an intentional effort to
induce retailers to substitute his product for other products requested by
consumers, is presumptive proof of secondary meaning. Norwich Pharmacal
Co. v. Sterling Drug, Inc., 271 F.2d 569, 571-72 (2d Cir.1959), cert. denied,
362 U.S. 919, 80 S.Ct. 671, 4 L.Ed.2d 739 (1960). For trademark infringement,
the courts have held that evidence of deliberate copying establishes a prima
facie case of secondary meaning, subject to rebuttal by the defendant, with the
defendant bearing the ultimate burden of proof once deliberate copying is
proven.26 Audio Fidelity, Inc. v. High Fidelity Recording, Inc., 283 F.2d 551,
558 (9th Cir.1960) (quoting My-T Fine Corp. v. Samuels, 69 F.2d 76, 77 (2d
Cir.1934) (L. Hand, J.) ), cert. denied, 371 U.S. 934, 83 S.Ct. 306, 9 L.Ed.2d
270 (1962). The rationale for this presumption is that when a defendant copies
the trademark of a competitor, it is likely that he intended to appropriate some
commercial advantage or benefit that his competitor derived from the use of the
mark. Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d
695, 704 (5th Cir.1981) (quoting American Chicle Co. v. Topps Chewing Gum,

Inc., 208 F.2d 560, 563 (2d Cir.1953) (L. Hand, J.) ), cert. denied, 457 U.S.
1126, 102 S.Ct. 2947, 73 L.Ed.2d 1342 (1982).
104 The Second Circuit has held that, under New York law, proof of secondary
meaning is not required if the defendant deliberately copied the plaintiff's trade
dress. Harlequin Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 950
(2d Cir.1981). The rationale for this rule for trade dress is, in addition to the
above rationale, that because the possible packaging and trade dress
alternatives available are many, monopolization is not a concern in this area.
As the secondary meaning rule was designed to limit the extent a producer
could monopolize a particular mark, it is therefore inapplicable. Perfect Fit
Industries, Inc. v. Acme Quilting Co., 618 F.2d 950, 953 (2d Cir.1980). If the
plaintiff shows that the defendant intentionally copied the plaintiff's trade
dress, then the burden is upon the defendant to prove a lack of secondary
meaning. cf. Brooks Shoe Manufacturing Co. v. Suave Shoe Corp., 716 F.2d
854, 859-60 (11th Cir.1983). This burden the defendants have not borne.
Judgment must issue in favor of the plaintiff on this issue.
105 In summary, we find and hold that the undisputed evidence compels the
conclusion of infringement by copying on the part of the defendants. See
Hutchinson Telephone Co. v. Fronteer Directory Co., supra, 770 F.2d 128.
CONCLUSION
106 The judgment herein is vacated and the cause is remanded to the district court
for further proceedings conforming to the decision herein.
107 VACATED AND REMANDED.

The plaintiff also asserted breach of a distributorship agreement between the

parties. That claim was decided adversely to the plaintiff and it has not been
pursued on appeal. The plaintiff has also abandoned its common law unfair
competition claim and relied on the section 43(a) claim

Jurisdiction was thus based on diversity, 28 U.S.C. Sec. 1332(a) (1983). In

addition, jurisdiction was based on 17 U.S.C. Sec. 1338(a) (1983) for the
copyright and trademark claims

For a description of ROMS see Stern Electronics, Inc. v. Kaufman, 669 F.2d
852, 854, n. 1 (2d Cir.1982)

Foy and Storino also obtained copyright registration TXu 106-734 covering the
computer program for Black Jack/Bonus 21, which apparently was the initial
game upon which all others are based

SMNS Manufacturing Corp. v. M. Kramer Manufacturing Co., Civ.Action No.

83-554 (D.N.J. filed February 16, 1983)

The games listed were Draw Poker Model I; Draw Poker/Joker Poker; Draw
Poker/Joker Poker/Hi-Lo; Hi-Lo Double Up Joker Poker, also known as Hi-Lo
Double Up Joker Poker with Flasher, Model II; Hi-Lo Double Up Joker Poker,
Nonflasher, Model II; Joker Poker Model II; Video Poker Model II; Black
Jack/Bonus 21; Black Jack Model I; Bonus 21, Model I; Bonus 21 Model II;
Black Jack Model II; Super Dominos Model II; and Tic Tac Toe Model II

See House Report, 1976, U.S.Code Cong. & Ad.News, 5659, 5660-61
(hereafter cited as House Report)

The amendments of 1980 followed the Final Report of the Commission on

New Technological Uses of Copyright Works (CONTU). That Report
recommended:
The new copyright law should be amended: (1) to make it explicit that
computer programs, to the extent that they embody an author's original
creation, are proper subject matter of copyright; (2) to apply to all computer
uses of copyrighted programs by the deletion of the present Sec. 117; and (3) to
ensure that rightful possession of copies of computer programs may use or
adopt these copies for their use.
CONTU Report at p. 12 n. 16.
The Amendments of 1980 conformed to these recommendations.

Prior to that amendment there had been some doubt whether a computer
program was copyrightable under the Act of 1976 in view of the language of
section 117 in that Act, which appeared to continue the status quo in copyright
law for computer programs. The conflicting arguments on the point are well
summarized in a Note, Copyright Protection for Video Games: The Courts in
the Pac-Man Maze, 32 Clev.St.L.Rev. 531, 538 (1983 ed.). We are of the
opinion that the reason for finding that computer programs were copyrightable
under the 1976 Act, as set forth in the Note, are convincing. We agree that
computer programs were copyrightable under the Act of 1976. Congress chose
to make crystal clear by the Amendments of 1980 that fact, and we see no
reason to review the earlier decisions on whether a computer program was
copyrightable under the 1976 Act

10

17 U.S.C. Sec. 102(b) provides:

In no case does copyright protection for an original work of authorship extend
to any idea, procedure, process, system, method of operation, concept,
principle, or discovery, regardless of the form in which it is described,
explained, illustrated, or embodied in such work.

11

Baker v. Selden, 11 Otto 99, 101 U.S. 99, 25 L.Ed. 841 (1879), is sometimes
cited for a narrower statement of the rule than Mazer. But see 1 M. Nimmer,
Nimmer on Copyright, Sec. 2.18 (D), 2-206 (1983)

12

"Audiovisual works" are in fact computer programs. See note 13, infra, and the
definition of video audiovisual works in Stern Electronics, Inc. v. Kaufman,
669 F.2d at 855

13

"Video games" are described in Stern Electronics, Inc. v. Kaufman, 669 F.2d at
853 "as computers programmed to create on a television screen cartoons [or
images] in which some of the action is controlled by the player." The copyright
itself in that case, just as the copyright in this case, covered the subject "audiovisual works" and not the computer program as such

14

For later developments in this case see Bandai America, Inc. v. Bally Midway
Mfg. Co., 775 F.2d 70 (3d Cir.1905)

15

See also United States v. Gallo, 599 F.Supp. 241, 245 (W.D.N.Y.1984), where
a criminal indictment for conspiracy to infringe a copyright in video games as
audiovisual works was upheld

16

Both a derivative work and a compilation are listed in the Act as proper
subjects of copyright. The difference in the two concepts, has been phrased in
the House Report as follows, p. 5670:
A "compilation" results from a process of selecting, bringing together,
organizing, and arranging previously existing material of all kinds, regardless
of whether the individual items in the material have been or ever could have
been subject to copyright. A "derivative work," on the other hand, requires a
process of recasting, transforming, or adapting "one or more preexisting
works"; the "preexisting work" must come within the general subject matter of
copyright set forth in section 102, regardless of whether it is or was ever
copyrighted.

17

The plaintiff contends that, when the "author" has rights in the underlying
work, as it asserts it has, that fact must be considered in resolving
copyrightability for originality. It relies on Rexnord, Inc. v. Modern Handling

Systems, Inc., 379 F.Supp. 1190 (D.Del.1974) and on 2 M. Nimmer, Nimmer

on Copyright, Sec. 7.16[B] for this argument. We, however, find it unnecessary
to this decision to resolve this issue in this case, since we are of the opinion the
cause can be determined on the ground that the plaintiff's addition to the
underlying work was sufficiently "original" to meet the standards for such term
established in the decisions
18

The district court overlooked the fact that in its complaint the plaintiff charged
infringement of both the computer program and the audiovisuals

19

In Mazer the Supreme Court said (347 U.S. p. 217, 74 S.Ct. 470): "Neither the
Copyright Statute nor any other says that because a thing is patentable it may
not be copyrighted. We should not so hold."

20

The notice must consist of a specified form: 1) the symbol CR, the word
Copyright, or the abbreviation Copr.; 2) the year of first publication; and 3) the
name of the copyright owner

21

The defendants seem to argue that the discovery of the omission occurred
simultaneously with insertion of the first improper copyright notice in 1981.
Until 1983, the plaintiff considered the improper notice to be an effective
copyright notice. It can hardly be said that the discovery of the lack of proper
copyright notice occurred during that time. That the mistake was a mistake of
law and not the result of an inadvertent omission is of no moment. Innovative
Concepts in Ent., Inc. v. Entertainment Enter., Ltd., 576 F.Supp. 457, 461-62
(E.D.N.Y.1983); Shapiro & Son Bedspread Corp. v. Royal Mills Assoc., 568
F.Supp. 972, 976 n. 3 (S.D.N.Y.1983), aff'd in relevant part, 764 F.2d 69, 73 n.
5 (2d Cir.1985). Therefore, the discovery of the absence of proper notice
occurred in 1983 and it is from that point that we judge the reasonableness of
Kramer Manufacturing's efforts

22

That section provides as follows:

Any person who shall affix, apply, or annex, or use in connection with any
goods or services, or any container or containers for goods, a false designation
of origin, or any false description or representation, including words or other
symbols tending falsely to describe or represent the same, and shall cause such
goods or services to enter into commerce, and any persons who shall with
knowledge of the falsity of such designation of origin or description or
representation cause or procure the same to be transported or used in commerce
... shall be liable to a civil action ... by any person who believes that he is or is
likely to be damaged by the use of any such false description or representation.

23

Citing Allen v. Zurich Ins. Co., 667 F.2d 1162 (4th Cir.1982), defendants also

argue that Kramer Manufacturing should be "judicially estopped" from

asserting this argument on appeal because it was not asserted below. While it is
generally true that a party may be precluded from asserting a position contrary
to one asserted in a prior proceeding, a fair reading of Allen v. Zurich Ins.
makes it clear that the doctrine of judicial estoppel is wholly inapplicable here.
The purpose behind the rule is to prevent a party from "playing fast and loose"
with the courts, Allen v. Zurich Ins., 667 F.2d at 1166, or from "convincing
unconscionably one judicial body to adopt factual contentions only to tell
another judicial body that those contentions [are] false." Konstantinidis v.
Chen, 626 F.2d 933, 938-39 (D.C.Cir.1980). Plainly those concerns are not
present in this case. The plaintiff is merely arguing that the district judge was
wrong on the law. "Indeed, if deemed necessary to reach the correct result, an
appellate court may sua sponte consider points not presented to the district
court and not even raised on appeal by any party." (Quoting Washington Gas
Light Co. v. Virginia Electric & Power Co., 4th Cir., 438 F.2d 248, 250-51),
Ricard v. Birch, 529 F.2d 214, 216 (4th Cir.1975)
24

Kramer Manufacturing also would have us hold that intentional copying

establishes the second prong under section 43(a), likelihood of confusion.
Because the district court did not address whether a likelihood of confusion
between the defendants' and the plaintiff's games existed due to their similarity,
and because the parties have not fully briefed or argued the issue, we do not
decide such issue. We note, however, that the leading commentator on the
subject states that the courts almost unanimously presume a likelihood of
confusion based upon a showing that the defendant intentionally copied the
plaintiff's trademark or trade dress. 2 J. McCarthy, Trademarks and Unfair
Competition Secs. 23:34-:35 (2d ed. 1984). See also Warner Brothers, Inc. v.
American Broadcasting Cos., 720 F.2d 231, 246-47 (2d Cir.1983) (evidence of
intentional copying raises a presumption of likelihood of confusion, but may
not in all cases survive a directed verdict); Brooks Shoe Mfg. Co. v. Suave
Shoe Corp., 716 F.2d 854, 859 n. 13 (11th Cir.1983) (intentional copying is
"evidence, but not conclusive" on issue of likelihood of confusion); Processed
Plastic Co. v. Warner Communications, Inc. 675 F.2d 852, 857 (7th Cir.1982)
(intentional copying establishes presumption of intent "to create a confusing
similarity of appearance and to have succeeded at doing so"). Among the
factors to be considered when deciding this factual issue in a trademark case are
"(1) the strength of the plaintiff's mark; (2) the similarity between the plaintiff's
mark and the allegedly infringing mark; (3) the similarity between the products
and services offered by the plaintiff and defendant; (4) the similarity of the
sales methods, i.e., retail outlets or customers; (5) the similarity of advertising
methods; (6) the defendant's intent, e.g. does the defendant hope to gain
competitive advantage by associating his product with the plaintiff's established
mark; and (7) the most persuasive factor on likely confusion is proof of actual

confusion." Conagra, Inc. v. Singleton, 743 F.2d 1508, 1514 (11th Cir.1984)
(citation omitted). See also 1 J. McCarthy, supra, at Sec. 15:10-:26
25

Unlike trademark infringement, which focuses on one aspect of a product's

"image," i.e., the trademark, trade dress infringement focuses on "the total
image of plaintiff's product, package and advertising and compare[s] this with
the defendant's image." 1 J. McCarthy, supra note 30, Sec. 8:1, at 282-83. The
underlying purpose of section 43(a) is to protect both consumers and
competitors from a wide variety of misrepresentations of products and service,
implicating "a broad spectrum of marks, symbols, design elements and
characters." Warner Brothers v. Gay Toys, Inc., 658 F.2d 76, 78 (2d Cir.1981)

26

The courts have also held that sufficiently distinctive trade dress, upon use in
the market, is presumed to serve as an identifier of source without proof of
secondary meaning. Chevron, 659 F.2d at 702-03